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Bailout plan will fail - My theory

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posted on Feb, 6 2009 @ 10:52 PM
Bailout Breakdown Graph

So basically the plan is to dump more money in things like Education, Road Construction, Energy and misc crap.

So the plan is to create new jobs, more jobs. Help cut down on the unemployment.

Unemployment rate is around 7% right now. That doesn't account for the people that were previously making 3x their salary and are working desperate jobs now, just to have some money roll in. Well in that case the bills don't drop but the salary does, adding interest on top of debt. And debt on top of debt. Banks don't get their loans, and people become slaves trying to work their debt off, that is compiling faster then their income.

Secondly, if this does create new jobs, we know how much teachers, construction, and government workers make. Its pretty sad, people can't live off of $10/hour in these times.

This bailout plan is throwing logs on the fire which is the national debt of this country, that doesn't include the personal debt that people are in. Getting low wage jobs isn't going to do much when someone used to make $150k/year.

The true winners of this bailout plans are the company owners who get the contracts and work off the back of their Mexican or desperate American workers for a truly sad wage.

So no, this will not effect us enough to make a difference. A direct stimulus to our personal bank accounts would do more then this would.

The only way to help ease this recession is to cut taxes - dramatically. The lost revenue can be made up by placing a heavy tax on companies that outsource work to other countries. Minimum wage will have to be higher, and fuel/energy expenses lowered, I can't afford a $300 electric bill when there is no need for a company to charge that much.

Stopping/Slowing outsourcing is key to this situation. My job I used to charge $45/hour for, is being done in India for $1/hour. I am not the only one here, tens of millions of us are in this boat.

[edit on 6/2/09 by xstealth]

posted on Feb, 6 2009 @ 11:10 PM
Oh well, it is to late now. I tried. Now we have already spent $8.5 trillion on NOTHING!

Casey Research, of Vermont, has analyzed the costs of the government bailouts of the housing crisis, the credit crisis and others and has concluded that the total is $8.5 trillion, which is more than the cost of all US wars, the Louisiana Purchase, the New Deal, the Marshall Plan and the NASA Space Program combined.

According to CRS, the Congressional Research Service, all major US wars (including such events as the American Revolution, the War of 1812, the Civil War, the Spanish American War, World War I, World War II, Korea, Vietnam, Iraq and Afghanistan, the invasion of Panama, the Kosovo War and numerous other small conflicts), cost a total of $7.5 trillion in inflation-adjusted 2008 dollars.


This was Plan A which did not work:

Let's assume that they will do what they have said and that is "7.4 to 7.78 trillion will be printed / created for the bailout and or credit revival and given to banks" the banks who currently refuse to loan money and extend lines of credit to business. (Links included are only for "information" sources to support the data and numbers included in this Summary)

Nov. 24 (Bloomberg) -- The U.S. government is prepared to provide more than $7.76 trillion on behalf of American taxpayers after guaranteeing $306 billion of Citigroup Inc. debt yesterday. The pledges, amounting to half the value of everything produced in the nation last year, are intended to rescue the financial system after the credit markets seized up 15 months ago

1) We now have businesses going "out of business" or if they are big enough they are begging the government for money because the banks are terminating lines of credit and no longer loan money though they are getting billions / trillions at 0% to 0.25% from the Fed.

2) Now we want even MORE money printed / created (estimated to be over another trillion) for a stimulus package for consumers because we need consumer spending to revive the economy. (Plan B definitely takes care of this) Barack Obama has revealed a stimulus package that could exceed $1 trillion. So I assume we need another 1 or 2 Trillion for another "stimulus" package to get money moving in the consumer markets? No problem... see Plan B.

So in essence, we are trying tickle down economics and it isn't working because the banks are keeping the money, investing it overseas, using it to buy out each other and giving themselves massive bonus & payouts. Well everyone, guess what... it isn't working. il-out.aspx

"Trickle Down" economics has changed to "Trickle Over" economics. Trickling over to foreign countries and interests and we cannot be successful with this course of action. Especially when the taxpayer is on the hook. Since I am a taxpayer, I would like to propose an alternate plan which will work.


Direct "Fed to Consumer Mortgage Recapitalization" or "Debt Recapitalization"

My plan was for mortgage holders / consumers to borrow mortgage money directly from the Fed directly at 0.5 %. This is a fraction of the interest that we are currently being charged by the banks.

By taking the 0.5% Mortgage "Recapitalization" from the Fed directly, we pay off our mortgages in full to the banks and the banks now have the capital of millions of "paid in full" mortgages and cannot complain about mortgage write-offs and defaults (if you haven't looked, go to a mortgage calculator and put in 7% or whatever your mortgage rate is... now try it with 0.5%).

At 0.5 % our monthly mortgage payments are about half of what they were. (STIMULUS PACKAGE DONE)

Now, The banks get these Mortgage pay-offs from millions of mortgages and they should have all the money they claim is needed to alleviate their asset shortages AND mortgage backed securities since all mortgages will be paid in full.

This is not a refinance and does not require surveys and assessments, this is strictly a "mortgage recapitalization" with a hard $300.00 "origination fee". (This can be adjusted, below is a quick example of how this origination fee would be used to assist our troubled city & state governments, as an added bonus it puts the local politicians on our side as it solves the current budget crisis at the local and state levels well.)

$50 is paid to a bank / finance organization who is providing the paperwork and processing.
$75 is paid to your city / municipality / county (Local Government)
$75 is paid to State you live in. (State Treasury)
$100 goes to the Federal Government.
(So this plan also helps the local / state governments that are in a pinch)

So which plan is better, another 1 or 2 Trillion on another stimulus package or a "long term" stimulus every month by halving our own mortgages? This is not charity, we are still on the hook for our principle plus 0.5% and the risk of default is almost 0.

Now - Legislate the REGULATION needed to prevent this from happening again and going forward. Once "existing" mortgages are "recapitalized" and the recapitalization project is completed, the banks can then pick up mortgage origination again.

Win / Win / Win

OK, Put current plans of action against "Plan B" side by side. We (would have) printed less money (In the long term as we have no idea how much they will spend on "project based" stimulus work programs" and we get the stimulus needed with Plan B.

posted on Feb, 9 2009 @ 12:07 AM

Originally posted by xstealth

This bailout plan is throwing logs on the fire which is the national debt of this country, that doesn't include the personal debt that people are in.

The national debt is fictitious money. The federal reserve creates the money with an accounting entry and then loans it to the govt. It won't be paid back, nor should it be.

posted on Feb, 9 2009 @ 02:15 AM

Originally posted by Make Speed Limit 45
The national debt is fictitious money. The federal reserve creates the money with an accounting entry and then loans it to the govt. It won't be paid back, nor should it be.


It is all just a system of control. Most people don't understand that the same money they work and sweat for can just be printed up.

posted on Feb, 9 2009 @ 02:24 AM
The so-called stimulus pkg. will do absolutely nothing to eleviate the average persons issues. $4 trillion is a number I've read that is more like what this country needs. There is no way Congress would ever release that kind of money unless a big part of it was going to be theirs! A huge majority of Congress only votes for bills if they get paid to vote for it...thus no money, no's as simple as that!

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